In sum, coercion imposes deadweight losses and creates winners and losers, which is the polar opposite of the win-win exchanges in markets. Politicians may hope that their interventions create more winners than losers, but that is wishful thinking because their decisions are based on no more than guesswork.

Defending the Early Years argues that “the CCSS for young children were developed by mapping backwards from what is required at high school graduation to the early years. This has led to standards that list discrete skills, facts and knowledge that do not match how young children develop, think or learn (and) require young children to learn facts and skills for which they are not ready.”

The standards, in short, “devalue the whole child and the importance of social-emotional development.”

But really the lesson is clear. An economic crisis can jolt a fundamentally pro-capitalist (or mostly pro-capitalist) nation that had lost its way back onto the straight and narrow. But there is no guarantee of recovery when the culture has descended into infantile anti-capitalism, dysfunctional statism, and an antagonism toward entrepreneurial dynamism and self-reliance. For these a crisis may not herald recovery but instead a longer, deeper national decline. Only a culture shift resulting from the spread of sound ideas can make Greece (and other countries) a fertile ground to accept real solutions. The need to spread the good news of liberty and free markets is clearly as urgent as ever.

We need to get this right about what the Millennium Development Goals have achieved

by Tim Worstall

sub-topic» General

What did work last time is that the rich world finally started buying things made by poor people in poor countries. Thus we should do more of this: more globalisation in short. And given that the bureaucrats, the UN, and their targets had almost nothing to do with it all the best thing we should set them as targets is that they should shut up, go home, and let the rest of us get on with making our fellow humans richer.

As we have been and as we’ll all continue to do as long as no one interferes.

Not surprisingly for economists, the main explanation for the Great Divergence is trade, fostered in part by favorable cultural and political institutions. This may seem obvious to those who understand that trade is a positive sum game, and that there are exponential gains from trade as markets expand and the division of labor becomes more fine-grained. The problem is that most philosophers who write about global poverty are convinced otherwise. They think that people in wealthy countries are in some sense responsible for poverty in less developed countries, and that we therefore have an obligation to do something about it.

So, who’s right? Moller thinks that if citizens in wealthy countries did not cause poverty among citizens in other countries, we are not violating any obvious moral duties by failing to offer aid.

"The 100th Man" tells the story of an African village that is burdened by a two-hour uphill walk to fetch water from the nearest river each day. That is, until one entrepreneurial tribesman has the idea to divert part of the river into a small stream flowing downhill to the village. An economy quickly emerges, but it is not without its challenges. I don't want to spoil the ending for you, so I'll stop there.

Free marketers and state socialists end up talking past each other because we simply cannot agree on the terms of the debate, on the basic historical and theoretical assumptions that we take into the conversation. They don’t believe our claim that true free markets (which they correctly complain have never existed) would yield equitable results for the poor and underprivileged, and we don’t believe theirs that the state can be remade into a quasi-charity serving the greater good. They see the state as “the things we do together,” a means of social cooperation and community, while we think such a description much more accurately describes market relationships.

So, the circular flow of income is, I think, a very pretty diagram which does a good job of illustrating just how a domestic economy works. If the diagram were in black and white and if the terms leakage and injection were kept away from it, then that would be one way of improving it. Only by avoiding the Keynesian colouring of the circular flow of income can we avoid the palpable falsehoods that follow from it.

In effect, the drive towards a cashless economy is forcing you to provide the kind of information about the way you spend as loyalty schemes have been collecting for years. This information is an incredibly valuable commodity. It has the potential to be used by retailers to target you with personalised advertising messages, and it could even be sold on to other companies. Even if your data is being used alongside your personal information, or you are able to opt out of these kinds of schemes, your data might still be harvested anonymously for market research purposes. If we accept a cashless economy, we may effectively be agreeing to join a huge loyalty scheme. We might get convenience rather than points for participating, but the effect is the same. We share everything we do with the companies that want to sell to us.

Tackling the cronies will not be easy, but identifying some of the most egregious special interests provides a useful starting point. A combination of honest, free-market money and deregulation would destroy the privileges of the financial sector. Dramatically shrinking public spending would undermine the government contractors. Scrapping patents would subvert that insidious form of protectionism. Planning liberalisation would reduce the advantages of crony-capitalist property developers. And land restitution (which raises many difficult issues) might start to address the widespread government-corporate theft of individual and communal property. Finally, abolishing occupational licensing would bring much-needed competition to state-protected professions.

Fractional reserve banking, money printing, government deficits, nothing new. But in the last 5 years the UK national debt has doubled. The conservative coalition has printed £350 billion. A figure too great for the human mind to conceive. How can any fund manager possibly run a pension fund on this basis? What should a yield be to protect a pension scheme which has a vesting date 20 years hence? Even if one accepts inflation at the absurd official rate of circa 2 percent grade A paper will barely wash its face. But we know that pensioners do not buy much in the way of white goods or technology products the areas where inflation has been subdued. Pensioners face significant inflation in real costs, fuel, heating, travel and food. The real inflation here is nearer 4.5 percent. This means over 20 years the saver must lose money. There is nothing his investment manager can do for him.

Clearly there are strong grounds for criticising the privatisation model imposed on the rail industry. The productivity gains associated with private enterprise were largely suffocated by heavy-handed regulation; a complex and fragmented structure pushed up costs; and huge sums have been wasted on uneconomic projects. In this context, it is unsurprising that fares have not fallen. However, it is also the case that these problems are symptoms of government intervention rather than the result of privatisation per se. Indeed they would not have occurred had the railways been privatised on a fully commercial basis under a ‘light-touch’ regulatory framework which allowed the organisation of the industry to evolve according to market conditions.

In short, minimum-wage legislation enriches more-advantaged workers by rendering the least-advantaged workers unemployable. Such redistribution is not only unjust; it is downright cruel – and made all the more so by the fact that not one in a thousand of its victims understands the true cause of his or her plight.

It is not, then, that banks don’t have access to lenders absent a central bank. The issue is whether the “lender of last resort” should extend credit to banks under any circumstances or only to banks that are illiquid but solvent. If the central bank, as a lender of last resort, is just going to mimic the market, what’s the point of having one? And if the central bank is not going to behave like the market, namely, easily extend credit to insolvent banks, then it does not only add moral hazard problems to the banking market, but it also fails to add efficiency to the market. A financial market with insolvent banks that are able to subsist thanks to the lender of last resort is less efficient and stable than a market where insolvent banks need to become solvent or discontinue business (like in any other market).

The logic of free trade is irresistible once a person takes the first step on its path. By effectively paying foreign workers with US dollars when they send us TVs, clothes, and other goods, we give them the purchasing power to buy American exports such as wheat and aircraft components. The opposite holds as well: If American consumers reduce their purchases of foreign-made TVs and other goods, then those foreigners will cut back on their purchases of American wheat and so forth. Ultimately, the video’s suggestion to “buy American” won’t create more American jobs in total, but instead will merely rearrange employment among sectors, making Americans poorer in the process.

Very Dry Water, Hard-Frozen Fire, and the Ostentatiously Invisible Rich

by Don Boudreaux

sub-topic» General

In his New York Times blog on Wednesday - in a post entitled “Having It and Flaunting It” – Paul Krugman complained that America’s rich are obsessed with exhibiting their wealth in the form of “ostentatious” consumption. Indeed, Mr. Krugman asserted that “for many of the rich flaunting is what it’s all about…. [I]t’s largely about display.” And this display, Mr. Krugman alleged, “imposes negative externalities on the rest of the population.”

A mere five days later, in his New York Times column today - a column entitled “Our Invisible Rich” – Mr. Krugman gripes that the reason more Americans aren’t infuriated by today’s great income inequality is that “the truly rich are so removed from ordinary people’s lives that we never see what they have.”

But perhaps most impressive is Hong Kong’s growth—not in people or buildings, but in actual land surface. In 1987 I walked along the Kowloon Peninsula Hotel’s harbor promenade. Since then, the city has reclaimed from the water nearly three city blocks in its desire to grow. Now, the Peninsula, while still a grand property, has only an urban promenade out its front door. On most economic freedom indexes, Hong Kong is king—among the top-rated economies in the world for the past 20 years. And it’s no wonder. Creative destruction, not whimsical history, is its modus operandi.

Market anarchism is a form of decentralism, a libertarian socialism that sees voluntary exchange and cooperation as solutions to the widespread inequality we struggle with today. Politicians and CEOs rather like the system we have in the United States; they depend on it, and it depends on them. The rest of us, quite unlike political and economic elites, don’t mind working for a living, aren’t asking for special legal privileges, and just want to be left free to undertake our own projects and pursue our own goals. That kind of free market offers an exit from present day inequalities, not an encouragement to them.

Today we are witnessing the devastating effects of the thousands and thousands of price controls, wage controls, rent controls and other regulations that have passed into law over the past 120 or more years, starting perhaps with the first anti-trust laws. The majority of citizens know nothing about the retrogressive domino effects of price controls and other regulations, so they constantly call for further controls whenever they are dissatisfied with anything. The government representatives, whether or not they are familiar with these retrogressive domino effects, don’t care, since their goal is to be re-elected, not to serve justice.

Let’s serve economic stability, justice, peace and harmony by calling for the repeal of all of the governmental controls in our lives. Better yet, let’s peacefully eliminate the State.

Which leads us to two observations: the first being that we don't actually have any evidence that inequality harms the growth prospects of the economy. The second is that even if it does whether reducing that inequality will reduce the performance of the economy depends upon precisely how we reduce the inequality. We might try price controls, rationing, import substitution, nationalisation, the Venezuelan route, or we might try a properly free market economy with a high VAT to give us the money to redistribute, the Swedish way. That latter works, in that the country is more equal (if that's something you want to worry about and we don't) and also remains competitive. The former doesn't work in either sense: but sadly if we look around UK politics we see those concerned with inequality arguing for those Venezuelan policies rather than those Swedish ones.

Free markets don’t have to mean the particular incarnation of corporate world dominance we see all around us today. For an entire tradition, an individualist anarchism that once blossomed in the United States, free markets meant simply voluntary exchange between sovereign individuals with equal rights and liberties. If consistently adhered to, such a system would, these anarchists argued, distribute wealth and property more evenly and equitably, effectively ending the exploitation of the working poor.

The phenomenon of capital cheapening relative to labor should raise an obvious question, but of course it does not because we have been conditioned to think of work as something we are given by the owning and employing classes in the form of “jobs” rather than something we do.

Balcerowicz himself has contrasted the experiences of what he refers to as the BELLs (Bulgaria, Estonia, Latvia, and Lithuania) with that of the troubled PIIGS (Portugal, Ireland, Italy, Greece, and Spain). The BELLs took immediate steps in response to the recession, significantly cutting spending in an attempt to get debt and deficits under control. The PIIGS muddled through with tax increases, some spending cuts spread over a number of years, and stimulus in some cases. While the BELLs all saw an initial contraction, they recovered quickly, and their economies have emerged stronger than those of most other countries in the region.

A minimum wage raises the cost of employing people. That is its whole purpose. But higher wage costs mean that employers – already under financial pressure from domestic and foreign competition, from everyday business costs, and from the costs of government regulation and taxation – have only two options. They can either hire fewer people, or toughen working conditions – cutting holidays, providing fewer breaks, spending less on the work environment.

It appears that the correct method to reduce unemployment is to reduce unemployment benefits, increase in work benefits, abolish the minimum wage and insist that those unemployed take a job, any job, at any price.

Most economists today, however, have sold themselves to the enemy. They work for government agencies such as the IMF, OECD, World Bank, central banks, or academic institutions where their research is heavily subsidized by government agencies. To succeed they have to “toe the line.” You don’t bite the hand that feeds you.

In this context, it should be mentioned that one need not be a conspiracy theorist or Occupy Wall Street activist to worry about the revolving door that exists between some sectors of the financial industry and senior positions in central banks and government finance departments. Of course, it’s hardly surprising that people with significant private-sector financial expertise will be recruited for public service in the world’s treasuries or central banks, and vice versa. Nor should we simply assume impropriety. That would be unfair. Nevertheless, the very real potential for crony capitalist trends to develop in the conduct of monetary policy shouldn’t be underestimated, and crony capitalism is, by definition, unjust and corrupting.

If you are a SELLER of unmounted rubber stamps, you should always give proper manufacturer credit when you know it. It is what is right and fair. It is what we ask for when we sell a huge grab bag of unmounted rubber stamps at a price low enough to allow the buyer to re-sell many of them. We specifically ask in those auctions that if they will be resold, they should be sold as "My Heart Stamps For You" rubber stamps. That is really all we can do...ASK, and then hope that sellers will be ethical enough to sell them with our name attached. Those who do, we thank you. Those who know the stamp company, but choose to market them as "unknown" for whatever reason, shame on you.

The primary reason that rebels create their own currency is that monetary control is far more of a force than people realize. Baron Rothschild was not being overly flamboyant when he said, “Give me control over a nation’s money supply, and I care not who makes its laws.” Being able to manipulate a money supply is a fantastic power, affecting every part of an economy. If you know in advance that the money supply will go up (diluting its value) or contract (concentrating its value), you immediately gain a massive advantage over everyone else – and you can target this advantage to help or hurt almost any group you choose.

Congress and the president must stop the spending that is soaking up goods, services, and labor, and crowding out both consumers and producers; stop the high taxes that are discouraging capital formation; stop trying to pick corporate winners and losers; stop bailing out financial institutions; stop the regulatory machine that is destroying innovation and misdirecting labor and resources; and, most of all, stop manipulating the nation’s currency.

The real issue is the manner in which people earn their money, not the fact that some have more while others have less. In the type of economic system in which we live — a welfare-warfare state and a regulated society — many people earn their money and get wealthy in morally illegitimate ways, e.g., through political plunder and political privilege. If people are getting wealthy that way, that’s something we should object to. But that’s a different issue from income inequality.

So any agenda of gradually scaling down government should take this context into account. The first things to go should be welfare for the rich and big business, and the last should be welfare for ordinary people. If we start by eliminating all the forms of artificial property, artificial scarcity, subsidies and entry barriers that concentrate wealth in a few hands, and let free competition destroy enormous concentrations of wealth and redistribute it downward, we might not even notice whether welfare, minimum wages or food stamps still exist because they would be used by so few people as to be a moot point.

The mines of South Africa should go to the workers, they whose labor (and that of their ancestors) developed them, sometimes with slave labor. The haciendas of Latin America should go to the landless peasants. Every piece of land in the world held by a parasite with a title of nobility should become the property, free and clear, of those now living and working it. Every acre of America which is currently held out of use by an absentee title should be regarded as unowned.

The effect of the credit monopoly in the existing capitalist economy is to make capital artificially scarce and expensive to labor, so the capital-owning class is able to control access to opportunities for work and charge a monopoly price for it. As a result the number of employment opportunities is artificially scarce compared to the number of workers, so that workers are competing for jobs rather than the reverse; since the employer has a superior ability to walk away from the table, workers must accept work on the bosses’ terms rather than vice versa.

Let’s take expatriation. After John Templeton renounced his citizenship and moved to Nassau (where there is no income tax), the federal government imposed penalties — to discourage other wealthy people from doing the same thing. That was because the government wants to tax them. But when a wealthy person expatriates, the distribution of income and wealth becomes more equal. Should we reverse course and encourage the John Templetons of this world to get out of town? If equality is a serious goal, we should at least relax the penalties.

Another excellent economic historian, Daron Acemoglu, explains how historically people who wielded political power have feared innovation and have done all they could to stamp it out. The same holds true today. Radical, unpredictable change that comes with innovation—what Joseph Schumpeter called “creative destruction”—threatens the tight control essential to keeping political power. The state hates what it can’t control, and it can’t control innovation. When government officials talk about reimagining society or harnessing human energies or regulating unbridled capitalism, what they want is to bring pesky innovators and independent thinkers under their thumb. That is not “innovative governance.” It is the death of innovation.

We only ever moved out of the caves because someone thought that house sharing with a hungry bear was unsatisfactory, only ever invented the car because of the rising tide of horse dung, it's the very things that we find unsatisfactory currently that drives the vast wave of innovation that has been sweeping us along these past few centuries.

Fortunately, most Americans do not (yet) care as much about income differences as do the hand-wringing professors and pundits - a fact that itself casts doubt on the prescience and observational skills of those professors and pundits who prattle on endlessly about the dangers of income inequality. In a modern, prosperous market-oriented economy, even stupendously large differences in monetary incomes or in wealth are not so visible to the naked eye – another fact that casts doubt on the underlying theory of those who worry about income envy erupting into social strife.

So what happens when the minimum wage goes up? In manufacturing, there's little substitution into do-it-yourself, so labor demand is relatively inelastic. In services, in contrast, there's a lot of substitution into do-it-yourself, so labor demand is relatively elastic. Precisely the opposite of the Unz view.

A commissar most certainly could (and would) decide that those properties in the most desirable area of London should only be for the use of those the commissar approved of, as happened everywhere that commissars allocated property. But even such a lauded and senior functionary would not be able to work out what they should be used for without some method of determining the relative values that the people themselves placed upon the alternative uses.

However, what is actually happening is that we're getting ever greater regulation of those financial markets. And that's a problem, for being able to deal with regulation is a fixed cost: and increasing those reduces the number of smaller players.

The counterintuitive fact is that, thanks to capitalism, we actually have a system that produces food so efficiently that we don't actually mind throwing it out if it looks and tastes a bit elderly. If only we could spread this production system to other places in the world where food is scarce and expensive because it is not produced efficiently at all. Again, you can blame governments in those countries for resisting the market economy, and our own EU authorities for trying to protect their own famers behind trade walls, for that crime – not a crime against food, but against humanity.

The fact that the American government is up and running again is very bad news. Not for the obvious reason that the American government is bloated, self-serving, unproductive, and completely incapable of spending the nation's money efficiently. But for the fact that the budget deal simply postpones problems that should be squared up to.

Work. For some, it’s an activity to be avoided. For others, it’s something you can’t live without. It’s not just that people work to stock the fridge and pay the bills. It’s that people work because, without it, their lives would somehow be less purposeful. If economics is the study of human action, work is a big part of thinking about economics. But it goes deeper than that, to questions about who we are as a species.

In short, among its many other deficiencies, as spelled out by Mises and his followers, monetarism’s most fundamental flaw is identical to the most fundamental flaw of Keynesian, Post-Keynesian, New Classical, and other theories advanced by macroeconomists during the past seventy or eighty years: not only does the theory leave out critical variables, but it is too simple, being expressed in huge, all-encompassing aggregates that conceal the real economic action taking place within the economic order.

This is what the right-wing “free market” think tanks mean by “market reform.” But it’s delusional to expect anything else, no matter how much they throw around the term “free market.” It’s just as foolish to expect genuine “free market reform” from right-wing capitalists as it is to expect genuine pro-worker policies from left-wing capitalists. Trying to promote free markets or help the exploited classes through the state is like doing origami with a hammer.

A “fair wage” is a “free wage”—that is, one that results from voluntary exchanges among workers and employers. Government should prevent fraud and violence and allow individuals to enter into mutually beneficial exchanges under a just rule of law that protects persons and property. The minimum wage violates freedom of contract and hence private property rights; it is neither moral nor effective. It is unfair to workers who can’t find a job, especially young workers in search of a better future.

The purpose of economic theory is to enable people to understand the implicit economic reality beneath superficial appearances. Critics of free markets observe the superficial appearances of the bazaar without delving into the ethical foundations of the free market and the economic causes of outcomes such as the boom-bust cycle. The ethical and economic reality is that markets are inherently ethical, and that they promote ethical behavior.

A PETITION From the Manufacturers of Candles, Tapers, Lanterns, Sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.

To the Honourable Members of the Chamber of Deputies.

by Fréderic Bastiat

sub-topic» General

First, if you shut off as much as possible all access to natural light, and thereby create a need for artificial light, what industry in France will not ultimately be encouraged?

If France consumes more tallow, there will have to be more cattle and sheep, and, consequently, we shall see an increase in cleared fields, meat, wool, leather, and especially manure, the basis of all agricultural wealth.

If France consumes more oil, we shall see an expansion in the cultivation of the poppy, the olive, and rapeseed. These rich yet soil-exhausting plants will come at just the right time to enable us to put to profitable use the increased fertility that the breeding of cattle will impart to the land.

If Cyprus or Greece or Spain or Portugal (or better yet, all of them en bloc) decided to quit the euro and revert to drachmas and pesetas, they would need to block bank accounts, impose currency and capital controls, and default on some of all of their foreign debts, which would be re-denominated in the new local currency. There would be lawsuits up the gazork, but the IMF and ECB would have to step in to limit the broader damage even if they disapproved.

The state—the organization of the political means—is the institution that allows an idle, unproductive class of parasites to live at the expense of ordinary, working people, whose means are industrious activity and consensual exchange in the marketplace.

Raising taxes on the private sector while government continues to gorge itself on tax-and-spend policies does not bring prosperity. Businesses undergo austerity by way of the recession-induced reduction in demand for their goods and services, yet the public sector doesn’t feel the need to tighten its own belt commensurately. Increasing the public burden upon the private sector only compounds what is already a harsh business environment. This is what most European nations have tried as their “austerity” programs, and they continue to suffer because of it.

On the other hand, the proper form of austerity closes a fiscal gap by reducing the burden of the state upon the already struggling private sector and cutting spending; this does bring prosperity.

Which brings us to an interesting observation. Monopoly, purely and simply as monopoly, is neither a bad nor a good thing. If someone's the lowest cost producer and can supply total demand then why the heck not leave it as a monopoly? The difficulty comes if someone attempts to exercise those monopoly powers, to gouge consumers in some manner. And for many to most monopolies the exercise of such power leads to competition and the breaking of that monopoly power.

If Britain really wants sustained economic growth, it needs to radically improve the conditions for innovation. But this requires a cultural change as well as government allowing it to take place. The eminent economist and historian Deirdre McCloskey describes this as the dignity and liberty for innovation: a willingness to embrace and celebrate the creative destruction of new products and processes supplanting the old. Modernity was born when Britain went from condemning Shakespeare's Shylock in the Merchant of Venice, to honouring James Watt with a statue in Westminster Abbey. But we are in danger of falling back into the ancient distaste for commerce and innovation. As Allister Heath rightly pointed out in his address to the ASI Christmas Party, we must combat the emerging politics of envy and redistribution, and embrace the optimistic impulse of innovation.

At any rate, we need not choose between forms of monopoly, because we can have competition if we want it. All we need do is keep government out of all economic activity. Monopoly is not a market phenomenon, but rather the product of government privilege, which, like all government activity, is rooted in force. And we all know who has a comparative advantage in procuring favors from government. Hint: It’s not average working people.

Another benefit, which grows out of the first, is that the market facilitates constructive interaction with strangers and hence promotes peace across broad geographical areas, even globally. What deeper compliment could one pay a social system? A money-based division of labor brings people together for mutual advantage, expanding the array of goods and fostering goodwill among individuals who might otherwise view one another with fear and suspicion. Instead of fighting or hiding from one another, they are producing valuable things for exchange and relating to one another as equals, and the resulting cultural cross-fertilization has untold beneficent consequences.

In the end Mises and Hayek were vindicated in no less grand a forum than the world political stage. By the 1980s it was obvious that living standards of citizens in communist countries were far below those of citizens of countries which had retained (more or less) the free-exchange system. The increased internal unrest in the Soviet Union and its suzerainties became increasingly hard to ignore. The collapse and formal dissolution of the Soviet Union in December 1991 demonstrated once and for all the contradictions inherent in nonmarket allocation schemes. Only market-guided resource use—the system of free exchange—could lead to widespread material abundance. Any attempt to suppress this system, however well-intentioned, was doomed to bring about nothing but lower standards of living.

I am glad you are sitting down as you see these words, gentle reader, otherwise you would topple right over as I did when first encountered them, while mistakenly standing up on my two feet. The economic benefits of the Apple iPhone 5 do not come from its merits, merely from the fact that the introduction of this item embodies obsolescence? My goodness gracious. If this were true, then wouldn’t it be even better if the rate of capital destruction were even greater? And wouldn’t it help the economy even more if this devastation were not confined to communication implements like the Apple iPhone 5 but ranged widely over the economy, poisoning everything in its path including housing, factories, pipelines, mines, etc. In the extreme, we might as well just bomb our capital, buildings, etc., so that we are left with no food, no clothing, no shelter, no anything. Think of all the aggregate demand we would have then!

As riots accompany new austerity measures in Greece and Spain, the euro is plunged into uncertainty again. Sanguine observers might predict that there will be three such crises in the next year, and that there will be three emergency summits held, and three announcements of new measures to deal with the problem. On each occasion markets will respond favourably for a very short time, then gloom and uncertainty will return. Those same observers might predict a further three such sequences in the following year, and three more in the year after that. And so on.

Remember, though, that economics teaches us that an action is always taken by someone for something. There are no disembodied costs, benefits, and values. In a world of scarcity, John believes saving rain forests is more important than saving the whales. Mary believes the opposite. If we are to get past disagreements on esthetics–essentially differences of opinion–that can turn into violent conflict, we need to find some way to settle our differences peacefully, some way to transform them into value-creating interactions.

Imperfect though it may be, the free market has so far been the most effective method we know of for doing that.

So yet more borrowing does not seem a particularly safe source of money to boost public-sector employment and wages. Nor is inflation. We have had too much of that too. A rising cost of living means that people's savings and pensions do not buy as much. And rising prices also confuse businesspeople about what is actually profitable: they cannot see the 'signal' of where the real demand is from the 'noise' of prices rising all around. That gave us the financial crisis: when everything seems to be booming, people make some pretty crass bets.